Impending Price Caps for Agency Staff

After my last blog, ‘NHS in Recruitment Crisis’, which looked at the Smith Institute and UNISON report, it is clear that the NHS has a substantial reliance on agency workers. This has stemmed from the government’s ‘pay squeezes’, which has made it increasingly difficult for the NHS to recruit and retain employees. The good news for NHS trusts and NHS foundation trusts is that positive action is now being taken and hourly rates for agency workers will soon be capped. However, this is not good news for those who recruit and supply agency workers. Monitor and the NHS Trust Development Authority (TDA) have only this month released their ‘Proposed Rules and Consultation’ document outlining these changes. The aim of these caps is to protect NHS trusts from the high hourly rates many agency workers charge. Also, it is hoped the caps will encourage more NHS employees to seek permanent employment, reducing the NHS’s reliance on agency staff.

So, what is the change?
As of 1 April 2016, Monitor and TDA intend for agency worker’s pay to equal that of permanent employees. This will be achieved via a three staged process, which will see the first caps on pay being introduced on 23 November 2015.
The table below demonstrates the proposed three stages and the price caps that will be applied. These price caps are a percentage above the national pay rate for an agency worker.

The above caps will be initiated until 1 April 2016 when all NHS trusts will be obligated to pay agency workers no more than 55% above the national pay rate for an agency worker employed directly or via an agency. This 55% cap is to include all expenses, pension contributions, NI, holiday pay and agency charges. This is the maximum that trusts can pay, although Monitor stress that trusts should try and pay lower rates where possible.

For those that are located in high cost areas, Monitor and TDA have set up a contingency and these workers should check if they are eligible for the Agenda for Change high cost area supplement. These supplements will be added to the percentages outlined in the table above:

5% for Fringe

15% for Outer London

20% for Inner London

Who is included?
It is probably easier to say who the caps will not apply to as all agency staff (clinical, non-clinical and even bank staff) will be affected. Those immune are:

Permanent employees

Staff employed by ambulance trusts

Any exceptions?
The new rules can only ever be overridden in cases where patient safety is at risk and only as a last resort. It will not be easy to override these caps and NHS trusts can expect to be interrogated if they do. When these caps are initiated NHS trusts and foundation trusts will be required to produce reporting returns, explaining any overrides (even at shift level). Monitor and TDA will then scrutinise these reports and will decide whether the caps have been inappropriately overridden. In these instances if trusts are found guilty they will face regulatory action.

Conclusion
It is important to remember these changes will be monitored to ensure they do not have any detrimental impact on patient safety. However, Monitor hope that with these caps not only will the NHS pay more affordable hourly rates for agency workers, but they will also have the tools to limit and reduce their agency expenditure too. These caps are a major concern for agencies and it is recommended they begin reviewing the potential impact these changes are going to have on their business sooner rather than later. The obvious outcome is that agencies may face reduced fees for the hiring of workers and that many agency workers will choose to become employed permanently as the financial benefits of temporary work will be substantially reduced. Monitor and TDA’s consultation on the above changes will be taking place until 5pm on 13 November 2015. All interested parties and stakeholders are invited to respond. To read the full document or to give your input, click here.